Whether it’s self-made real estate millionaire Barbara Corcoran, Robert Reffkin, chief executive of Compass, or Meredith Whitney, the “Oracle of Wall Street,” they all seem to agree on one thing: once mortgage rates fall to 6% or less, anyone waiting on the sidelines will reenter the housing world. 

And it isn’t only those three who call that the goldilocks number either. Just yesterday when asked if there was a magic number for mortgage rates, Mat Ishbia, billionaire chief executive of lender United Wholesale Mortgage, told CNBC anything in the 5% range—even 5.99% could be a trigger point for market activity. 

So where are we exactly? Well, the average 30-year fixed weekly mortgage rate dropped to 6.2% on Thursday. In the release, Freddie Mac said: “Mortgage rates have fallen more than half a percent over the last six weeks and are at their lowest level since February 2023. Rates continue to soften due to incoming economic data that is more sedate.” And at the moment, the average 30-year fixed daily rate is 6.15%. 

Decoded, that means if you’re of an older generation, this information probably sounds great. Mortgage rates were much higher in the ’80s and ’90s, after all. But then they started to slowly drop, reaching a rock bottom during the pandemic below 3%. That’s why anything higher than 6% doesn’t quite hit the magic mark for younger buyers, even if it is substantially more affordable than an 8% mortgage rate. 

Let’s take a look at the math. Say you’re buying a $600,000 home. After putting 20% down, with a 8% mortgage rate, your monthly payment is roughly $3,522 (not including taxes and insurance). Consider the same circumstances but with a 6% mortgage rate, your monthly payment is about $2,878; and lastly, with a 3% mortgage rate, your monthly payment is $2,024. 

The difference between an 8% rate and a 6% rate comes out to roughly $7,728 when you account for the entire year; the difference between a 6% rate and a 3% rate comes out to roughly $10,248. Seatbelts please: The difference between a 3% and 8% rate is $17,976. Those are considerable gaps would-be buyers and sellers are forced to weigh as they make their decision. It’s why we’ve seen the lock-in effect in full force. It doesn’t make financial sense to give up a low mortgage rate (one that may never exist again) for one that’s more than double. Not to mention, home prices have gone up, too, so it won’t be an even trade either way. 

Still, some people have to move for circumstances sometimes beyond their control, and if they’ve been putting it off and waiting for rates to fall, a 6% or lower mortgage rate might move the needle for them. In some cases, it already has because inventory is higher compared to last year. 

The same can be said for those who want to buy a home but have been waiting for rates to fall. They may realize this could be as good as it gets for a while. And it seems to be what real estate executives are banking on for their own sake. “Despite the improving mortgage rate environment, prospective buyers remain on the sidelines, as they negotiate a combination of high house prices and persistent supply shortages,” the Freddie Mac release read.